Parnell: Trip gave insight on oil expectations

By BECKY BOHRER, Associated Press

Published: 2013.05.03 12:28 PM

JUNEAU (AP) — Alaskans can "legitimately expect" billions of dollars more in new investment in the next few years under the tax changes recently approved by the state Legislature, Gov. Sean Parnell said.

The Republican governor told The Associated Press that during his latest trip to Europe, he saw firsthand the impact of tax changes on North Sea operations, particularly in Scotland.

He said part of the reason he took the trip — his third, state-sponsored overseas tour — was because he's after new economic opportunities for Alaska residents. Parnell said he now has a better idea of what to expect in Alaska under the recently passed tax plan.

Critics, however, called the trip a junket, saying Parnell was trying to build support for the oil industry tax cut. There is a citizen-backed effort underway aimed at repealing the plan.

"I understand there are those in the Legislature who, for political ends, want these changes to fail," Parnell said. "But I believe they will succeed for Alaskans' benefit."

Based on what he saw overseas, Parnell said, Alaskans should see new oil from legacy fields in two years.

He made his comments in a phone interview Wednesday, before heading home to Alaska. He was expected to announce his future political plans Friday.

During the trip, Parnell also visited Norway. He said he encouraged Statoil to consider development on state lands. The company already has expressed interest in the Alaska Arctic.

Parnell also has faced criticism for touting two recent oil company announcements — including that Repsol found oil in test wells drilled this past winter — as encouraging steps toward new production and investment, given the tax cut hasn't even been signed yet.

Rep. Les Gara, D-Anchorage, poked fun, likening it in his e-newsletter to "taking credit for gravity."

Activist Andree McLeod said in an email that Parnell is using public funds and staff "to burnish his missing foreign relations experience in advance of future elections ... and serving his special interests in Washington, D.C."

As for Parnell's positive outlook based on what he learned in Europe, the United Kingdom has seen a number of up-and-down tax changes over the past decade, according to the UK Oil and Gas Industry Association.

The most recent change came last year, allowing for a tax break in aging fields known as brownfields. That came on the heels of a tax increase in 2011.

Sally Hatch, a spokeswoman for the UK Oil and Gas Industry Association, said in an email that recent tax changes are "repairing investor confidence."

She said there was record investment last year, which is expected to increase this year. She said production also is forecast to increase, from the current 1.55 million barrels of oil equivalent per day toward 2 million barrels of oil equivalent per day in 2017.

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